Important Financial Investment Terms
Thousands of investors have told us they are confused by the investment jargon that is used by financial advisors. We also know some terms, that investors don't understand, are used by advisors as sales ploys. They establish themselves as experts when they define a term you may not understand.
There is an alternative. We have defined more than 1,500 commonly used financial terms. Look-up a definition by entering the term in the search engine or using the alphabetical search service.
Definition of 'P/E Ratio'
P/E stands for price to earnings ratio. It is a measure to determine how expensive a stock is. The ratio is calculated by taking the share market value and dividing it by the company's earnings per share. An example would be if the share price is $10 and the earnings per share is $2, the P/E ratio would be 5. the stock is trading at 5 times earnings. When you compare the P/E ratio of companies in the same industry, the ones with the higher P/E ratio's would be riskier than the lower ones.